Time right to remove GST loophole, says Myer chairman
Myer chairman Paul McClintock believes the Coalition government will act quickly to repair commonwealth-state relations, which had become frayed under the previous administration in Canberra, as a crucial first step to eliminate the GST exemption on imported goods.
Mr McClintock, who has strong government connections as a previous secretary to the cabinet and head of the cabinet policy unit reporting directly to former Prime Minister John Howard, said there was now no barrier to shutting down the loophole which allows goods, mostly bought online, to enter Australia GST free if they have a value below $1000.
The $1000 threshold on imports has been a bugbear for the retail sector for years, with executives claiming domestic retailers were at an unfair price disadvantage to their offshore competitors.
An Ernst & Young report cited by many retailers, including Mr McClintock when he addressed shareholders at the company's annual meeting, said 33,000 retail jobs would be lost by 2015 if the GST-free threshold was not changed.
But Mr McClintock said after the meeting that it was an important and contentious issue about which federal and state policymakers were increasingly in agreement. "The state governments are much more involved than they were because they are the ones who are losing the revenue," he said. "Part of it is waiting to finally get an agreed position about how you [administer the collection of GST on imports], but the government has a process now running which should deliver that pretty quickly. "I don't see any barrier now to actually closing this down."
Mr McClintock said the matter was urgent, as jobs and much needed state revenue were being lost. There has been no commitment yet from the Abbott government to either eliminate or lower the GST-free threshold, and any attempt to charge GST on the flood of items bought online could trigger a furious backlash from consumers.
Meanwhile, Myer chief executive Bernie Brookes told shareholders he expected the country's biggest department store would continue to face tough trading conditions into 2014 as poor consumer sentiment and competition squeezed its earnings.
He said trading had improved "modestly" during the first quarter but remained patchy with Myer well positioned for the Christmas and stocktake trading period.